New Payment Method for Air Tickets Successfully Demonstrated

The International Air Transport Association (IATA) announced the successful completion of the first “IATA Pay” ticket purchase transaction in a live test environment. The transaction was conducted in partnership with ipagoo, a UK-based fintech company.

IATA
Pay is an industry-supported initiative to develop a new payment option
for consumers when purchasing a ticket directly from an airline
website. It is made possible by the European Commission’s second Payment
Services Directive (PSD2), and the UK’s Open Banking regulation. These
regulations encourage use of so-called direct debit transactions in
which payments are made from the customer’s bank account directly into
the bank account of the merchant. This method offers an extremely high
level of security to both user and recipient and can be instantaneous.

IATA’s
role is to develop an industry solution enabling airlines to make this
payment option available on their websites. The live test conducted with
ipagoo was done under the UK’s Open Banking framework with IATA Pay
pilot airlines, including Cathay Pacific Airways, Scandinavian Airlines
and Emirates.

For airlines, the advantages of IATA Pay are:

Cheaper payment option compared to other alternatives

Highly secure

Faster cashflow with instant/near instant payment to the merchant

Simpler payment process resulting in fewer lost sales.

For consumers the benefits include access to a new, simpler method of payment that is highly secure. “Today’s consumers, and especially millennials, have expectations of multiple payment options including mobile and peer-to-peer. IATA Pay responds to these expectations. At the same time, airlines are trying to manage significant card payment costs — $8 billion per year and rising. A large part of this cost is incurred in direct purchases from airline websites. One of IATA’s strategic objectives is to support airlines’ financial sustainability including controlling costs,” said Aleksander Popovich, IATA’s Senior Vice President of Financial and Distribution Services.

Carlos Sanchez, CEO, ipagoo said: “We are delighted to
have completed the first Open Banking live transaction for the airline
industry, helping IATA and its member airlines to achieve their goals of
operational and financial efficiency. ipagoo’s technology provides a
secure, multi-country banking service for IATA. We are at the forefront
of development and innovation within the financial industry and
committed to helping businesses and their clients take advantage of the
opportunities provided by Open Banking.”

IATA is also working with
Deutsche Bank on a prototype for Europe (excluding the UK), starting
with the German market, which is expected to undergo testing in early
2019.

Following this, IATA will validate the concept with the intention to expand to other regions.